* Euro zone govt bond yields up sharply
* Bund yields at 7-wk high, 5-year yields highest since March 2016
* Unease over tapering even after ECB bid to soothe markets
* German inflation edges up unexpectedly in June
* Global central banks seen as more hawkish
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Updates prices)
By Dhara Ranasinghe
LONDON, June 29 (Reuters) - Germany's 10-year government bond yield rose to a seven-week high on Thursday, with investors unable to shake off jitters that the European Central Bank is getting ready to scale back its massive monetary stimulus programme in the months ahead.
Data showing inflation in Germany, the biggest economy in the single currency bloc, edged up unexpectedly in June and stronger-than-expected inflation numbers in Spain helped send five-year German yields to their highest level since March 2016, adding to heavy selling across the region.
That sell-off was sparked on Tuesday after comments from ECB chief Mario Draghi were seen as opening the door to monetary policy tweaks, fuelling market expectations that the central bank could announce a reduction in stimulus in September.
ECB sources told Reuters on Wednesday that markets had over- interpreted Draghi's comments, allowing bond yields to pare some of their sharp increases.
However, in a week during which Bank of England Governor Mark Carney has raised the spectre of an interest rate hike in Britain in the coming months, nervous investors stayed away from rate-sensitive bond markets.
The U.S. Federal Reserve this month hiked rates for the second time in 2017, forecast one more hike this year and seemed to largely brush off recent mixed economic data.
"First, we have to recognise that we are coming out of an extraordinary period where bond market yields were low and market volatility was squished - a backdrop that lends itself to an outburst of volatility," said Peter Schaffrik, global macro strategist at RBC Capital Markets.
"Secondly, the comments from the ECB come against a backdrop of a global move by central banks all pointing in the same direction."
Germany's 10-year bond yield jumped 9 basis points to 0.45 percent, hitting a six-week high after data for June showed German consumer prices rose by 1.5 percent on the year - higher than analysts had forecast.
Five-year German bond yields rose as high as minus 0.23 percent, while 30-year bond yields also soared 8 basis points to a five-week high at 1.22 percent.
Across the euro zone, bond yields were anywhere between 6 and 12 bps higher on the day, while U.S. and British bond yields also rose sharply .
With the euro zone economy rebounding and the ECB facing a scarcity of eligible bonds for its bond-buying stimulus, focus has turned to a "tapering" of the ECB's stimulus scheme even as the ECB tries to calm market expectations for a tighter policy.
Bundesbank President Jens Weidmann said on Thursday he sees the current expansive monetary policy as appropriate.
"Seeing the fall-out of Tuesday's speech from Draghi, ECB officials showed some effort to downplay the message," analysts at ING said. "The 10-year Bund yield, consequently, dropped back somewhat, but the 'damage' has been done and yields have settled in the upper half of the year-to-date trading range."
Money markets price in a roughly 90 percent chance the ECB will lift interest rates by July 2018, a turnaround in rate-hike expectations from just a few weeks ago.
"We are approaching the point where the ECB is going to have to discuss tapering as it's running out of eligible bonds to buy for the scheme," said Commerzbank rates strategist Rainer Guntermann.
"And Draghi has painted a scenario where there is a also fundamental reason for that if the ECB looks past recent subdued inflation data."
Editing by Ed Osmond